
Commercial mortgage loans are usually split into two distinctive categories:
Commercial mortgage repayments are also divided into two main types:
Interest only commercial mortgages are arranged with repayments that only cover the interest of the mortgage. The repayments do not pay back any of the capital. Instead, businesses can repay the capital through a number of options, such as insurance, investment and asset sales, although they will be required to prove they are able to do so.
Interest only commercial mortgages can be of great advantage to businesses who wish to have lower regular repayments in the hope of being able to offer a lump sum for complete pay-off within a number of years. But, careful planning is needed to ensure that this is the case and the mortgage provider must be fully convinced that the business is capable of making the lump sum payment.
A 100% commercial mortgage can be provided by some lenders to help small businesses raise enough capital for a deposit on a commercial property.
The cash deposit is made up of the security for the property that the business is looking to purchase plus any additional assets they are willing to provide as additional security.
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